Australian motor industry says voluntary CO2 cuts on track

THE decision by President Barack Obama to bring forward by four years fuel economy standards laid down in the dying days of the Bush administration has sparked calls for similar action in Australia.

The new US fuel economy target - to be introduced at the same time as a national exhaust emissions regulation - has been hailed by environmental groups in the US and Australia.

However, the Australian car industry was quick to warn politicians against a knee-jerk reaction in Australia, where the regulatory framework is different to those in the US and Europe.

The industry is concerned about a coincidence between the Obama announcement and the fact that two Australian ministerial council meetings are scheduled for Friday – one for transport ministers and one for environment ministers.

Both will be considering fuel efficiency improvement options in a paper generated by a meeting of the Council of Australian Governments.

President Obama’s new plan requires five per cent improvements in fuel efficiency each year between 2012 and 2016, reducing the required average fleet consumption to 35.5 miles per gallon (6.6 litres per 100km).

The Bush administration was aiming to reduce the fleet average to 35mpg (6.7L/100km) by 2020.

Left: FCAI CEO Andrew McKellar.

With the agreement of California, President Obama has authorised the Environmental Protection Agency to implement one national standard for emissions, eliminating potential problems arising from the intentions of California and 13 other states to implement their own emissions laws.

Unlike two years ago when President Bush introduced his legislation, the Obama proposal was supported by all car-makers that have assembly plants in the US.

The Australian Conservation Foundation and the NRMA in Sydney have greeted the news with a renewed call to adopt the proposed 2012 European emissions standard of 120 grams of CO2 per kilometer for cars sold in Australia.

“Japan, Taiwan, South Korea and now the United States have all introduced mandatory fuel consumption standards for new cars and it’s time for Australia to do the same,” said the ACF’s Monica Richter.

Ms Richter acknowledged the local industry’s voluntary code of practice which has a target of an average of 222g/km for passenger cars, SUVs and light commercial vehicles by 2010.

This is almost double the 120g/km limit to be introduced in Europe in 2012.

“Unless we catch up to the rest of the world, the Australian vehicle industry will be left behind,” Ms Richter said.

The NRMA urged the government to introduce new fuel consumption standards in stages out to 2015.

“Mandating fuel consumption standards is a logical step towards reducing the greenhouse emissions of Australian vehicles as well as reducing the cost to households of having a motor vehicle,” said Wendy Machin, the president of the NRMA’s motoring and services division.

Ms Machin said Japan and the European Union required passenger cars to achieve a fuel efficiency standard of 5.0L/100km (with equivalent emissions of about 140g/km).

Federal Chamber of Automotive Industries (FCAI) chief executive Andrew McKellar said the local car industry – manufacturers and importers alike – understood the need to make a contribution to the abatement of carbon emissions, along with every other sector of the economy.

The industry’s concern was that, if fuel economy or emissions standards were mandated on top of current and proposed regulations, it could end up costing motorists $120 for each tonne of carbon saved, instead of $25 to $30, he said.

“In Australia, the key distinction is that the Government had put forward plans for an emissions trading scheme (ETS), known as the Carbon Pollution Reduction Scheme (CPRS), and one of the key features of that new scheme is that it will include the road transport sector.

“In Europe, road transport is excluded from the ETS and, partly as a consequence, the EU more recently has moved to implement new mandatory vehicle emissions targets of 120 grams of CO2 per kilometre.

“In the US, they don’t have an ETS, although the Obama administration has indicated it is inclined to develop one.” Mr McKellar said the vehicle industry would be picked up by the ETS and that any other measures would only increase the cost to motorists and the economy.

The Obama changes were estimated to add around $US600 ($A770) to the cost of a V6 sedan with a four-speed automatic – essentially a Commodore/Falcon sized car.

“The evidence from Europe suggests that going down the track of mandatory emissions regulation is a second best option,” Mr McKellar said.

“It is likely to result in higher abatement costs for the automotive sector and that, in turn, will end up being passed on to consumers in vehicle prices.

“Why pay $100 or $150 a tonne for CO2 abatement (through engineering changes) when you can achieve the same result for $25 or $30 a tonne (through an ETS)?” Mr McKellar said he hoped the ministers attending the two Minco meetings this Friday would realise Australia was well placed on fuel efficiency and emissions reduction.

“The Australian approach, through the CPRS and the arrangements under the Green Car Innovation Fund, is actually world leading.

“We would encourage ministers not to come up with a knee-jerk reaction.” Mr McKellar pointed out that the current voluntary emissions target of 222g/km for passenger cars, SUVs and light commercial vehicles combined, was on track.

“We expect to exceed that target early, by 2010,” he said.

“Our preference would be to continue to develop voluntary targets along those lines rather than have mandatory regulations introduced.”